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NET RECEIPTS OF FARMERS ABOVE OPERATING EXPENSES

Mr. ENGLUND. The above estimates relate to agriculture as a whole. In another set of estimates we make use of answers to inquiries sent out to owner operators, and those are the figures we obtained for the calendar year 1931. Of course, the situation will be somewhat worse in 1932. We received voluntary returns from 7,437 farmers last year showing their total cash receipts, expenses, and so forth. The average cash receipts for those farmers was $1,549, which we believe is better than the general average of all farmers. The net cash receipts of those farmers, before deducting taxes and after paying the hired labor and making the purchases they had to make, were only $388. Their taxes represented $183 on the average. Thus, for the year 1931, the taxes took 47.2 per cent of the cash returns that remained after the other cash charges had been met.

Mr. BUCHANAN. After the operating expenses of the farm had been paid?

Mr. ENGLUND. That is correct; yes, sir. In addition, the farmer had food products, the use of the farmhouse and certain other noncash returns from the farm.

Mr. BUCHANAN. Do you have any figures with regard to agriculture as a whole, along the line of what Mr. Englund has just stated? In other words, what were the net receipts of the farmers above the actual operating expenses of their farms?

Mr. OLSEN. Yes, sir; in our national income statement for agriculture, we have those figures, and we shall be able to segregate them for you. Would you wish me to elaborate upon that now, or insert the statement in the record?

Mr. BUCHANAN. This would be a good place to put it in the record. Mr. ENGLUND. We do not have the net income figures for the past year, but we have the figures on the gross income, which I can give you now.

Mr. BUCHANAN. Do you have figures showing the gross expenditures for operating farms?

Mr. ENGLUND. Not for the past year, because that is an extremely complicated figure to arrive at. We do not have that for the past year, but I will be glad to furnish it for the record.

Mr. BUCHANAN. I suppose you could cover that better in the record.

Mr. ENGLUND. Yes, sir.

Mr. OLSEN. I think the details of it can be better presented in a special statement.

Mr. BUCHANAN. Then, you may furnish it for the record.

(The material referred to is as follows:)

Changes in farm income in the United States, 1929-1932
[Division of Statistical and Historical Research]

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The cash receipts less cash outlay for production expenses, including taxes on owner-operated farms reporting to the Bureau of Agricultural Economics, fell from $1,097 in 1929 to $458 in 1931, and to a still lower level in 1932. Reports for 1932 have not yet been made. In the West North Central States the decline has been from $1,423 per farm to $516; in the South Central States from $828 to $253, and in the Western States from $1,663 to $599. Including the value of food produced and used in the farm home and deducting interest paid, the income în 1931 for these reporting farms was only $462 compared with $1,160 in 1929. These results cover larger-than-average farms.

Estimates of the Department of Agriculture which cover all farms, owneroperated and other, show that gross income per farm declined from $1,900 in 1929 to $1,106 in 1931. The amount available for capital, labor, and management was $847 in 1929 and only $343 in 1931. This amount has been further reduced in 1932 to probably well below $300 as is indicated by the decline in gross income from $1,106 in 1931 to $833 in 1932.

REDUCTION IN GROSS INCOME OF AGRICULTURE FROM FARM PRODUCTION

Mr. OLSEN. I would like to call attention to the fact that this price collapse is reflected in the estimated drop in the gross income from agriculture, from around $12,000,000,000 in 1929 to around $5,200,000,000 for 1932. That is the preliminary estimate which we have made that is, a drop of from $12,000,000,000 to somewhat above $5,000,000,000.

Mr. BUCHANAN. That means a loss of $7,000,000,000 of income. Mr. OLSEN. Yes, sir; $7,000,000,000 of gross income. The manner in which these returns for production have been made is shown by this chart [indicating]. From that you can see how severe the collapse has been.

Mr. HART. Is that broken up into groups of wheat commodities, cotton, potatoes, and so forth, or are they all thrown together? Mr. OLSEN. It is made up by commodities and by States.

Gross income from farm production, United States, by commodities, 1929-1931 [In thousands of dollars; i. e., 000 omitted]

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Crops:

Gross income from farm production by groups of commodities, 1929–1932

Grains..

Fruits and nuts.

Vegetables..

Sugar crops..

Source of income

Cotton and cottonseed.

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1 Preliminary.

Net agricultural production-that is, production for market or for use in the farm home in 1932, was the lowest for any year since 1923. (Fig. 1.) Based upon preliminary estimates of production and marketings the index for 1932 was 94 per cent of the 1924-1929 acreage, compared with 103 in 1931, 98 in 1930, and 93 in 1923. The production of tobacco, cotton, grains, fruits and vegetables, and wool in 1932, were all below that of 1931, and more than offset the slight increase in the production of truck crops and meat animals.

REDUCTION IN FARM LAND VALUES

Mr. OLSEN. Now, the consequence of these reduced returns for production are very far reaching, and I can touch upon only a few of them, but I want to bring them to your attention. One of the most serious effects has been upon the value of land. You may recall that in previous hearings I have pointed out to you that in 1920 the value of land was at its peak. The values then were about 70 per cent above the pre-war level. Since that time those values have been declining. Until this last debacle the decline was tapering off, and we were rather hopeful that land prices had reached the bottom; but between March 1, 1930, and March 1, 1932, there was another drop from 15 per cent above the pre-war level to 11 per cent below the pre-war level for the United States as a whole. In other words, the last figures we have, in the spring of this year, show that land values in the country as a whole are now 11 per cent below what they were before the war. For two-thirds of the States they are below the pre-war level. That is the average figure that I gave you, and from that you can imagine what the situation is in some of the States. That, of course, is an exceedingly serious situation, because it destroys the equities which the farmer has in his land, and, of course, it is one of the grave influences behind the foreclosure situation.

Mr. BUCHANAN. What percentage of drop in the value of land would these last figures show from this high peak?

Mr. OLSEN. About 50 per cent from the peak in 1920.

Mr. ENGLUND. In 1920, Mr. Chairman, land values were 70 per cent above the average of 1910-14. That was the peak. In the year

ending March, 1931, the average land values were only 3 per cent above the pre-war level. In the year ending March, 1932, the land values were 11 per cent below the pre-war. So the drop has been from 70 per cent above to 11 per cent below.

The following table is inserted to show the trend of land values by States:

United States Department of Agriculture, Bureau of Agricultural Economics, farm real estate: Estimated value per acre, in terms of pre-war average value, by States, March 1, 1932, with comparisons

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